Mortgage switching activity has risen 39% year-on-year, spurred by the impeding exits of KBC Bank Ireland and Ulster Bank, according to research from MyMortgages.ie.
Despite the two lenders planning to wind up their Irish operations, the site said that a sharp increase in competition and the possibility of the European Central Bank (ECB) raising interest rates had also driven switching activity from March 2021 to March 2022.
In the past 12 months, ICS and Avant Money have introduced mortgages with fixed rates of 1.95% for up to five years, while Finance Ireland and Avant have made available 25- and 30-year fixed terms, and Haven Mortgages has offered a green rate of 2% fixed for four years, with €2,000 cashback for switching.
"Having just reviewed activity in our own client base, we see that our figures tally with recent statistics from the most recent data from the BPFI, which shows that switching is currently the fastest growing segment, the volume of which jumped by 42% in the 12 months to Feb 2022," Joey Sheahan, head of credit at MyMortgages.ie, said.
"No-one knows when the ECB will increase their rates but the general consensus is that rises are on the horizon – we might well see two or three between this year and next.
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"Although we always advise consumers to review their mortgage every three years or so, mortgage holders are more in tune with their finances than ever before. This is perhaps a positive consequence of the pandemic in that people have had more time to look at their financial position, whether it be through necessity or desire.
MyMortgages.ie has also observed a steady increase in the number of tracker mortgage customers enquiring about long-term fixed rates, fearing potential interest rate rises could neutralise the benefits of their low-margin tracker.
Sheahan said Ireland is lagging behind its neighbours in Europe in terms of interest rates, which he described as being at an all-time low while Irish mortgage rates are "still significantly ahead".
"In terms of value, Ireland’s mortgage providers are competing more on fixed rates – with longer terms and lower pricing," Sheahan said.
“Whether to switch or fix is a perennial conundrum for mortgage holders and because no one has a crystal ball to tell what will happen with rates, there’s no one right answer. You must look at your personal situation and payment preference.
“If you decide to fix, you must then decide whether to go long term or short term. This again is down to each individual mortgage holder.
“If somebody has bought their forever home, they might be more inclined to take a longer fixed term, which can be up to 30 years, whereas if a borrower thinks they may be moving in the coming years they might take a shorter fixed term such as three years.
“The lowest fixed rate available is a three-year fixed of 1.95%. with Avant Money and ICS based on a loan to value of below 60%.”
The BPFI found that the volume of remortgaging and mortgage switching activity rose 43.9% in volume terms in February, with 719 homeowners either remortgaging their home or switching mortgage providers.
(Pic: Getty Images)
